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The Dynamic Wealth Report
August 2, 2010


The view from the window was awe inspiring.  For as far as my eyes could see was forest.  It was like I was suspended above the trees.  I was staying at the Chateau d’Artigny for a few days.

Throwing open the ten foot tall windows exposed the most amazing view.  I simply sat down at an antique writing table and just stared.

Almost two weeks in Europe… it was time to collect my thoughts.

I’d met with a great many people… some of them planned… many by quirk of fate.  I had so many ideas floating around in my head.  I needed to get them down on paper.

It was funny… the biggest idea of all wasn’t even about Europe.  (I’ll share it with you in a moment.)

As I traveled around Europe, I never hesitated to talk with people.  It’s a skill I learned from my grandmother.  She could become best friends with people standing in a checkout line.  Needless to say, I had many interesting conversations.

As I jotted down my thoughts, I noted a trend.

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I was shocked by the number of Australians on holiday.  In just two weeks, I met more Australians than Brits (and Britain is right next door). The Aussies were everywhere… at the cafes, in the hotels, at the museums, in the parks.  I even bumped into one as I was shopping in a grocery store!

I’d like to think these random meetings were coincidence.

Whenever I bumped into an Australian, I asked the same question… “How’s the economy?”

Each and every one said the same thing.  The Australian economy is booming.  Not just booming… the Australian economy is ON FIRE!

One comment literally put me on the floor.

At breakfast one day, I met a couple from Western Australia.  They started telling me about the expansion of mining efforts which are nothing short of phenomenal.  Demand from China is insatiable.

My “spies” told me big business was worried about all the activity.  The number of workers they estimate needing in just a few years exceeds the number of unemployed people!  Think about that.

Now, this information is far from formal data, but the conclusion is simple…

And it’s what led me to the biggest idea of all.

Australia’s economy is growing.  New jobs are being created every day… and that leads to wage increases and eventually inflation.  With inflation comes interest rate increases, proof the economy is hot, hot, hot.

Just last week the Australian CPI numbers hit 3.1%… it’s huge.  It means the economy is strong and prices are rising.  We’ll get further confirmation at this week’s meeting of the Reserve Bank of Australia.  We should see good news from them.

Remember, economic activity is being driven by growth in Asia.  China’s demand is driving big gains in exports.  More exports mean more business activity… and bigger corporate profits.  And bigger profits mean higher valuations for domestic companies.

That means Australian stock prices are poised to jump.

If you follow my reasoning, you could try and buy a few Australian companies, but that takes time and lots of research.  I prefer a simpler method.

Take a look at the iShares MSCI Australia Index (EWA).  It’s an ETF holding 75 of the top companies in Australia.  It’s designed to follow along with the Australian market.  More than 26% of the fund is invested in materials companies.  And expenses are low at just 0.55%.

The ETF is showing great promise.

In the last 12 months, EWA is up more than 17%.

Based on my conversations in Europe, I believe Australia is poised for another round of rapid growth.  To take advantage, consider investing in EWA.  But act quickly… once the rest of the world realizes just how hot the Australian economy is, stocks could skyrocket!

Sectors On The Move 

•  Travel & Tourism (Up 24%)

Recently we wrote about the growth of the Travel & Tourism industry… that entire industry’s up more than 24% in the last month.  Priceline (PCLN), Avis Budget (CAR), and Hertz (HTZ) are leading the group higher.


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Issue Date:
 Monday, August 2, 2010


Notable Highs and Lows

•  Inergy (NRGY) hit a 52-week high of just over $43.  The energy infrastructure company recently boosted its dividend.  They now have a market cap of just over $2.8 billion.

•  Progress Energy (PGN) hit a new 52-week high of $42.  The utility holding company is throwing off a dividend of just under 6%.  They now have a market cap of just over $12 billion.

•  Titanium Metals (TIE) hit a new 52-week high of just under $23.  Once again, the specialty metals company is reaching new highs.  They now have a market cap of just over $4.1 billion.


Quote of the Day

"Every great advance in natural knowledge has involved the absolute rejection of authority."

                           -
Thomas Huxley

 
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